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Transitional protection

An overview

If you have been invited to claim Universal Credit (UC) through the formal managed migration process, and you make a valid claim, your claim will have 'transitional protection' which is to help with the move to UC.  This is because when the Government introduced the managed migration roll-out, they said people should not be worse off. 

UC has very different rules from the benefits it has replaced, so some people would not have qualified for UC without transitional protection and some people would be worse off. Transitional protection is intended to help with these situations, but it is not intended to be permanent. 

Eligibility
To be eligible for managed migration transitional protection:

  • You must have been invited to claim UC under managed migration with a formal notice.

  • You must make the claim either before your deadline date or within one month after your deadline date (the final deadline).

Transitional capital disregard

Normally, people with over £16,000 in regarded savings or capital are not entitled to claim UC, as it is a means tested benefit. However, tax credits do not have a similar rule, so there are lots of tax credits claimants who have capital in excess of £16,000. For this reason, if you claim UC under managed migration, UC will ignore any capital above £16,000 for up to 12 monthly assessment periods. This disregard only applies if you are entitled to an award of tax credits and have capital exceeding £16,000 on the day before your UC claim starts. 

The transitional capital disregard means that any capital or savings above the £16,000 threshold is ignored by UC.
UC would still require details of the capital that you have, and a deduction would be made to your ongoing UC payments based on the amount of capital between £6,000 and £16,000. The deduction would be  £174 per month, if you have more than £16,000 in savings. This would be taken into consideration when they are working out the transitional element. 

If you continue to have over £16,000 in regarded capital after 12 monthly assessment periods, your transitional capital disregard will end and your UC claim will fall under the normal rules and your UC claim would be closed. 

If during the transitional capital disregard 12-month period your capital falls below the £16,000 amount, the disregard ends. Your claim would remain open, as you can claim UC with £16,000 or less under UC normal rules. 
If your regarded capital increases to above £16,000, you would not be eligible for the transitional capital disregard and your UC claim would be closed.

You would be expected to report any changes to your capital when they happen. 

If during your 12 monthly assessment period disregard your claim closes due to earnings or income zeroing your entitlement, if you make your re-claim within 3 months, you can continue your transitional capital disregard. 
Example: You claim UC for eight monthly assessment periods and your claim closes due to earnings wiping out your entitlement, as long as you reclaim within 3 months, you can continue to have your remaining 4 monthly assessment periods of transitional capital disregard. 

See below for when all forms of transitional protection end.

NOTE 1: Certain types of capital are disregarded on UC. This includes the equity in a house you live in as your main home, business assets, value of occupational or private pension you have not accessed while below pension age. You would not need to be part of managed migration to have these disregarded. They are disregarded indefinitely.
You can read more about capital disregards here.
NOTE 2: If your capital amount does decrease, UC may ask you for information and evidence of what happened to your capital. This is so they can make a decision on deprivation of capital. If it is decided that you have purposely deprived yourself of capital in order to claim benefits, UC will treat you as still possessing the capital. 

Transitional student disregard 
Normally, students cannot claim UC, unless they meet an exemption. However, tax credits and legacy benefits have different rules. This disregard is in place to allow students who may not be eligible for UC to finish their course of education. 

It only applies for the duration of the course that you are enrolled on, and you need to have been enrolled on it the day before your UC claim starts.
If you are eligible for student income, this can still have an effect on your UC within the normal rules. You can read more deduction for student income here

If during your transitional student disregard your claim closes due to earnings or income zeroing your entitlement, if you make your re-claim within 3 months, you can continue your transitional student disregard. 

See below for when all forms of transitional protection end.

 

Transitional element
This is an extra element within your UC award and is intended to mean you are not worse off on UC, as long as your circumstances haven't changed. UC cannot tell you how much transitional element you will receive in advance. It will be calculated and factored into your first UC breakdown, which you will receive one month after making your UC claim. It should be applied automatically.

Your transitional element will be an additional element within your full entitlement and will be clear on your statement. 

If you find that you are worse off and your transitional element has been missed or calculated wrongly, you should dispute this with UC. 

The transitional element is only intended to be temporary and if you are awarded a new element, or another element increases, your transitional element will erode. The childcare element does not change the transitional element.
Example 1: You have a transitional element of £120. Your housing element increases by £50 due to a rent increase. Your transitional element will decrease by £50 to £70. Your UC amount remains the same overall, but you do have to pay £50 more in rent. 
Example 2: You have a transitional element of £500. You have your first child and child element of £287.92 is added to your statement. Your transitional element will decrease by £287.92 to £212.08. Your UC amount remains the same overall, but you do have a child now. 
Example 3: You have a transitional element of £300. You start paying eligible childcare and have childcare element of £200 included in your UC award for the first time. Your transitional element remains at £300 as childcare element does not have an effect on transitional element. 

Your transitional element amount is not eroded or effected by any changes during your first monthly assessment period on UC. It is also only eroded by new or increase in elements (except childcare element), therefore a change in income does not erode the transitional element. This is because a change of income would just be a change of deduction - not an increase in an element. 

Every April/May when the benefits have their annual uprating is an increase in UC elements. This will cause erosion to transitional element. This means anyone with transitional element will not feel the benefit of annual uprating until they still have transitional element. 

If you have a transitional element and your claim closes due to earnings or income zeroing your entitlement, if you make your re-claim within 3 months, you can continue your transitional element.

NOTE: The transitional element cannot be included if you were claiming legacy benefits as a joint claim and claim UC as a single claimant, or if you claimed legacy benefits as a single claim and claim UC as a joint claimant. Transitional capital and student disregard can still apply.

When all forms of transitional protection end

Transitional protection was never intended to be permanent. As explained above:

  • Transitional capital disregard ends after 12 monthly assessment periods or when your capital falls to £16,000 or below. 

  • Transitional student disregard ends when your current course is completed. 

  • Transitional element ends when eroded to zero.

All forms of transitional protection end if:

  • You are claiming UC as a single claimant and start living with a partner, resulting in making a joint claim for UC.

  • You are claiming UC as a joint claimant and no longer living with a partner, resulting in making a single claim for UC. 

  • If you lose entitlement to UC due to income or earnings, and you are not eligible for UC within 3 months.

  • Your UC claim closes because you do not meet the basic requirements to claim UC such as;

    • Failing to accept commitments.​

    • Failing to provide evidence within the specified time limits.

    • Going abroad for more than one month (longer if absence is related to bereavement, medical treatment, you are a mariner or continental shelf worker, you are a crown servant or serving in HM Armed Forces) - click to read more.

    • Failing to complete review.

    • Capital over £16,000 - if not entitled to transitional capital disregard.

    • Withdrawing your claim.

  • If you are earning above the Administrative Earnings Threshold (AET) and have a sustained drop in earnings to below AET for three consecutive months. The AET relevant to you, is what the AET amount was when your claim for UC started - read more on this below.

protection ends

Sustained drop in earnings below AET

When UC transitional protection was laid out, Government wanted to ensure that transitional protection would not encourage people to decrease their earnings so there are rules in place that if you have a sustained drop in earnings for three months, you will lose all transitional protection - BUT it is only relevant to people who had earnings above their AET in the first monthly assessment period. This rule applies whether UC would expect you to work and the reason for your earnings dropping is irrelevant. 

Example 1: You make a single claim for UC on 13 May and have earnings of £900 in your first monthly assessment period. This is above your AET.
At some point during your claim, your employer reduces your shifts and for three consecutive months, you earn less than £800 per month. This is below your AET.
Since you have had a sustained drop in earnings below your AET, you lose all forms of transitional protection and your claim will be treated as normal going forward with no transitional element.

Example 2: You make a single claim for UC on 13 May and have earnings of £500 in your first monthly assessment period. This is below your AET.
You gain some extra shifts over the summer period and your earnings increase. This is above your AET.
After summer, your shifts return to the previous level, and you are now earning below your AET continuously. 
Since your earnings were not above your AET in your first monthly assessment period, you do not lose any transitional protection at all.

Example 3: You make a joint claim for UC on 13 May and have combined earnings of £1500 in your first UC monthly assessment period. This is above your AET.
You are off sick from work and your combined earnings reduce to £1000 for two months. This is below your AET. In the third month you are back at work and your earnings increase to £1500 again. 
You do not lose transitional protection at all because the decrease below AET was only for two months. You would have only lost transitional protection if it was three consecutive months.

NOTE: If you are self-employed, considered gainfully self-employed by UC and subject to minimum income floor or the start-up period, you will be treated as earning above the AET regardless of your actual earnings. 

 

Challenging transitional protection
If you do not agree with how UC have applied transitional protection to your claim, you can challenge this through a mandatory reconsideration and appeal. There are time limits, and we would strongly suggest you get independent advice before proceeding. 

 

If you think that the UC decision was correct at the time, but new information has become available, you can ask UC to supersede the original decision.
 

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